State Plans to Sell Large Stakes In Sibneft, Sidanko Oil Firms

Russia has announced plans to privatize big stakes in two top oil companies, and a senior government official said economic growth depended in part on the state selling its industrial holdings.

Deputy Economy Minister Sergei Vasilyev, in an article published in Wednesday's Segodnya newspaper, said the state had shown itself incapable of managing property and there was no reason to suppose things would improve in the future.

"The sooner the state is relieved of the assets that are burdening it, the more effectively the economy will work," Vasilyev said.

The Federal Property Fund said this week it would hold investment tenders for a 19 percent stake in Sibneft and a 34 percent stake in Sidanko, two of Russia's huge vertically integrated oil companies.

Privatization officials said in May that Russia would sell off 34 percent stakes in five oil companies -- Sibneft, Sidanko, Vostochnaya, Onako and Norsi-oil.

A fund official said the starting price for the Sidanko stake would be 110 billion rubles ($20.8 million). In investment tenders, potential purchasers bid for the shares and pledge to invest a certain sum in the firm over a set period.

Vasilyev said that if the economy were to grow, investors had to have somewhere to put their money, and companies had to be prepared for private owners.

He said privatization had slowed this year and last, and the state still had large shareholdings. "The state cannot manage a company through a 5 to 10 percent stake, but the very fact of the state's presence frightens potential investors," he added.

Privatization has been the cornerstone of more than four years of pro-market reform, but has become increasingly unpopular.

A loans-for-shares scheme late last year, under which state-owned stakes in privatized companies were auctioned off in exchange for loans to the government, was widely seen as an undignified dash for cash or as simply unfair.